Impeachments, Partisan Alignment, and the Local Bureaucracy. Evidence from Peru
Do political crises at the national level alter or shift decision-making in the local bureaucracy? The paper studies the relation between national political crisis and how they affect the budgetary decision-making of local administrations who are aligned or unaligned with the national government in peril. I answer this question leveraging the Peruvian political crises between 2018 and 2020 using a rich, monthly dataset on district municipalities’ spending and a difference-in-differences design, which uses the constitutional fact that election cycles of local mayors are independent of national election cycles. I find that municipalities, where mayors share the same party affiliation as the President, spend 10% more during political crisis, especially on discretionary budget lines. Resources are shifted towards less efficient provision of public goods. This finding would suggest that, even in contexts with weak parties, there are important cross-level political dynamics that can lead to inefficient spending decisions.